v3.26.3
REGULATORY MATTERS
 9 Months Ended
Sep. 30, 2026
Regulated Operations [Abstract]  
REGULATORY MATTERS REGULATORY MATTERS
We discuss regulatory matters in Note 4 of the Notes to Consolidated Financial Statements in the Annual Report and provide updates to those discussions and information about new regulatory matters below.
REGULATORY ASSETS AND LIABILITIES
With the exception of regulatory balancing accounts, we generally do not earn a return on our regulatory assets until a related cash expenditure has been made. Upon the occurrence of a cash expenditure associated with a regulatory asset, the related amounts are recoverable through a regulatory account mechanism for which we earn a return authorized by applicable regulators, which generally approximates the three-month commercial paper rate. The periods during which we recognize a regulatory asset while we do not earn a return vary by regulatory asset.
REGULATORY ASSETS (LIABILITIES)
(Dollars in millions)
SempraSDG&ESoCalGas
September 30,
2026		December 31,
2025		September 30,
2026		December 31,
2025		September 30,
2026		December 31,
2025
Fixed-price contracts and other
derivatives
$32 $50 $(13)$7 $45 $43 
Deferred income taxes recoverable in rates(1)
2,688 2,314 1,219 1,098 1,434 1,189 
Pension and PBOP plan obligations
(544)(610)14 (1)(558)(609)
Employee benefit costs18 18 3 3 15 15 
Removal obligations(3,738)(3,540)(3,085)(2,913)(653)(627)
Environmental costs152 152 112 113 40 39 
Sunrise Powerlink fire mitigation124 125 124 125 — — 
Regulatory balancing accounts(2)(3):
Commodity – electric267 186 267 186 — — 
Commodity – gas, including
transportation
583 173 54 17 529 156 
Safety and reliability(4)
684 894 268 286 416 608 
Public purpose programs(295)(347)(102)(175)(193)(172)
2024 GRC retroactive impacts— 299 — 124 — 175 
Wildfire mitigation plan(5)
871 530 871 530 — — 
Liability insurance premium
(48)(62)(63)(53)15 (9)
Other balancing accounts
(492)90 (341)4 (151)86 
Other regulatory assets (liabilities), net(3)
35 104 50 72 (15)32 
Total$337 $376 $(622)$(577)$924 $926 
(1)    At September 30, 2026 and December 31, 2025, $55 and $54, respectively, is included in Assets Held for Sale on the Sempra Condensed Consolidated Balance Sheets.
(2)    At September 30, 2026 and December 31, 2025, the noncurrent portion of regulatory balancing accounts – net undercollected for Sempra is $1,046 and $1,060, respectively, for SDG&E is $732 and $502, respectively, and for SoCalGas is $314 and $558, respectively.
(3)    Includes regulatory assets earning a return authorized by applicable regulators, which generally approximates the three-month commercial paper rate.
(4)    Includes decreases of $38 and $111 in 2026 at SDG&E and SoCalGas, respectively, from regulatory disallowances associated with the Track 3 PD and $92 in 2026 at SoCalGas from regulatory disallowances associated with the Transmission Integrity Management Program PD.
(5)    Includes a $222 increase in 2026 from the reversal of a portion of regulatory disallowances as a result of SDG&E’s Track 3 PD and a $508 decrease in 2025 from regulatory disallowances associated with SDG&E’s Track 2 FD.
Transmission Integrity Management Program
In September 2026, the CPUC issued a PD authorizing an $82 million revenue requirement, compared with the $174 million requested by SoCalGas, for costs associated with the 2019 GRC cycle for integrity assessments and repairs associated with federal regulatory changes. In the third quarter of 2026, SoCalGas recorded a charge of $92 million ($66 million after tax) in Regulatory Disallowances, Net, on the Condensed Consolidated Statements of Operations, of which $91 million ($66 million after tax) relates to prior years and $1 million relates to 2026.
On October 29, 2026, the CPUC approved a revised PD that reduces the disallowance of capital and O&M costs by approximately $30 million, and allows SoCalGas to propose an alternative allocation of the disallowance between capital and O&M costs. SoCalGas is required to submit an advice letter within 30 days of the FD’s effective date to calculate the final revenue requirement. As a result, the charge SoCalGas recorded in the third quarter of 2026, pursuant to the PD, may change based on the approved advice letter. SoCalGas expects to file the advice letter in the fourth quarter of 2026.
Catastrophic Event Memorandum Account
In July 2025, the CPUC issued an FD that authorized partial recovery of costs recorded in SoCalGas’ Catastrophic Event Memorandum Account. The FD authorized the recovery of $19 million out of the requested $55 million, denying recovery of COVID-19 costs included in the Catastrophic Event Memorandum Account. In the nine months ended September 30, 2025, SoCalGas recorded a charge of $36 million ($25 million after tax) in disallowed costs, comprised of a $29 million reduction in Utilities: Natural Gas Revenues and a $7 million reduction in regulatory interest in Other Income (Expense), Net, on Sempra’s and SoCalGas’ Condensed Consolidated Statements of Operations. The CPUC denied SoCalGas’ request for a rehearing of the FD. In February 2026, SoCalGas filed a petition with the California Court of Appeal.
CPUC GRC
A CPUC GRC proceeding is designed to set authorized base revenue requirements that are sufficient to allow SDG&E and SoCalGas to recover their reasonable operating costs and to provide the opportunity to realize their authorized rates of return on their capital investments.
2024 GRC
In December 2024, the CPUC approved an FD in the 2024 GRC for SDG&E and SoCalGas that authorizes SDG&E’s and SoCalGas’ revenue requirements for 2024 and attrition year adjustments for 2025 through 2027, inclusively.
In December 2025, SDG&E and SoCalGas filed a petition for modification of the 2024 GRC FD, seeking to modify the post-test year mechanism for capital related costs. The petition for modification seeks increases of $55 million, $87 million and $79 million to the approved revenue requirements for SDG&E for 2025, 2026 and 2027, respectively, and increases of $86 million, $122 million and $109 million to the approved revenue requirements for SoCalGas for 2025, 2026 and 2027, respectively. In October 2026, the CPUC issued a PD denying the petition for modification of the 2024 GRC FD. SDG&E and SoCalGas expect the CPUC to issue an FD in the fourth quarter of 2026.
2024 GRC Track 3
In April 2025, SDG&E and SoCalGas each submitted additional requests to the CPUC in the 2024 GRC, known as Track 3 requests. SDG&E requested review and recovery of WMP costs incurred in 2023 in excess of amounts authorized in the 2019 GRC. In March 2026, as amended in April and May 2026, SDG&E submitted supplemental testimony seeking review and recovery of drone inspection and repair program costs incurred from 2019 through 2022. These costs had been transferred from SDG&E’s Track 2 request following the Track 2 FD. In total, SDG&E’s Track 3 request seeks recovery of $659 million of direct costs associated with the WMP and drone inspection and repair programs. In June 2026, SDG&E and three of the four intervenors filed an offer of settlement with the CPUC addressing recovery of these costs. In September 2026, the CPUC issued a PD approving the settlement agreement and reducing SDG&E’s requested revenue requirement from $766 million to $621 million. SDG&E expects the CPUC to issue an FD in the fourth quarter of 2026. If approved, the settlement would improve upon the initial Track 2 FD related to the 2019–2022 drone inspection and repair costs, which disallowed approximately $245 million of revenue requirement but permitted SDG&E to refile its request. In total, the settlement represents an approximately $234 million increase in revenue requirement compared with the Track 2 FD, primarily attributable to the recovery of drone inspection and repair program costs incurred from 2019 through 2022.
Separately, SDG&E and SoCalGas submitted a combined Track 3 request seeking review and recovery of $240 million and $499 million, respectively, of PSEP costs. SDG&E incurred its PSEP costs from 2014 through 2019, and SoCalGas incurred its PSEP costs from 2015 through 2020. In September 2026, the CPUC issued a PD authorizing revenue requirements through 2026 of $210 million for SDG&E and $361 million for SoCalGas. SDG&E and SoCalGas expect the CPUC to issue an FD in the fourth quarter of 2026. Through 2026, SDG&E and SoCalGas are authorized to collect $193 million and $341 million, respectively, in rates under an interim cost recovery mechanism approved by the CPUC in 2016. The Track 3 PD authorizes SDG&E and SoCalGas to collect the remaining $17 million and $20 million, respectively, in 2027.
Accounting Impacts from Regulatory Disallowances
As a result of these PDs in the Track 3 requests, SDG&E recorded a credit in the third quarter of 2026 to Regulatory Disallowances, Net, of $104 million ($72 million after tax), of which $98 million ($67 million after tax) relates to prior years and $6 million ($5 million after tax) relates to 2026. The credit consists of the reversal of a portion of the $651 million ($464 million after tax) regulatory disallowance charge recognized in the fourth quarter of 2025, partially offset by an additional regulatory disallowance charge recognized in the third quarter of 2026. SoCalGas recorded a charge in the third quarter of 2026 to Regulatory Disallowances of $217 million ($157 million after tax), of which $209 million ($150 million after tax) relates to prior years and $8 million ($7 million after tax) relates to 2026.
2028 GRC
In June 2026, SDG&E and SoCalGas filed their 2028 GRC applications requesting CPUC approval of test year revenue requirements for 2028 and attrition year adjustments for 2029 through 2031. The following amounts reflect the applications as updated by revised testimony filed in September 2026:
REQUESTED REVENUE REQUIREMENTS IN 2028 GRC
(Dollars in millions)
Test yearAttrition years adjustment
2028202920302031
SDG&E
$3,748 $325 8.7 %$224 5.5 %$239 5.5 %
SoCalGas
5,090 314 6.2 311 5.8 313 5.5 
The requests in the 2028 GRC applications are subject to CPUC approval. SDG&E and SoCalGas expect to receive an FD in the first quarter of 2028 with new rates to be effective in January 2028.
CPUC COST OF CAPITAL
A CPUC cost of capital proceeding every three years determines a utility’s authorized capital structure and return on rate base. The CPUC applies the CCM in the interim years to consider changes in the cost of capital using changes in interest rates as reflected by the applicable utility bond index published by Moody’s (CCM benchmark rate) for each 12-month period ending September 30 (the measurement period). The index applicable to SDG&E and SoCalGas is based on each utility’s credit rating. The CCM benchmark rate is the basis of comparison to determine if the CCM is triggered in each measurement period, which occurs if the change in the applicable Moody’s utility bond index relative to the CCM benchmark rate is larger than plus or minus 1.00% for the measurement period. Alternatively, each of SDG&E and SoCalGas is permitted to file a cost of capital application to have its cost of capital determined in lieu of the CCM in an interim year in which an extraordinary or catastrophic event materially impacts its cost of capital and affects utilities differently than the market.
The following table summarizes the CPUC-approved cost of capital for SDG&E and SoCalGas. The authorized weighting remained unchanged for each of the years presented.
AUTHORIZED COST OF CAPITAL
Authorized weighting2026-202820252026-20282025
Return on rate baseWeighted return on rate base
SDG&E:
Long-Term Debt45.25 %4.59 %4.34 %2.08 %1.96 %
Preferred Equity2.75 6.22 6.22 0.17 0.17 
Common Equity52.00 9.93 10.23 5.16 5.32 
100.00 %7.41 %7.45 %
SoCalGas:
Long-Term Debt45.60 %5.02 %4.63 %2.29 %2.11 %
Preferred Equity2.40 6.00 6.00 0.14 0.14 
Common Equity52.00 9.78 10.08 5.09 5.24 
100.00 %7.52 %7.49 %
FERC RATE MATTERS
SDG&E files separately with the FERC for its authorized transmission revenue requirement, ROE and capital structure on FERC-regulated electric transmission operations and assets.
TO5 Settlement
SDG&E’s TO5 settlement provided for an ROE of 10.60%, consisting of a base ROE of 10.10% plus the California ISO adder. In December 2024, the FERC issued an order, which SDG&E has appealed, finding that SDG&E is not eligible for the California ISO adder and that the TO5 adder refund provision had been triggered, requiring SDG&E to refund customers the California ISO adder retroactively from June 1, 2019.
TO6 Settlement
In June 2026, the FERC issued an order approving the TO6 offer of settlement. The TO6 settlement is retroactively effective as of June 1, 2025, and remains in effect until terminated by a notice provided in March of any year. Among other things, the settlement increases SDG&E’s authorized base ROE from 10.10% to 10.28% and establishes a hypothetical capital structure with 54% common equity. SDG&E recognized the retroactive impact in the second quarter of 2026. The TO6 settlement does not affect SDG&E’s appeal of the FERC’s disallowance of the inclusion of the California ISO adder.
SAN ONOFRE NUCLEAR GENERATING STATION
We provide below updates to ongoing matters related to SONGS, a nuclear generating facility near San Clemente, California that permanently ceased operations in June 2013, and in which SDG&E has a 20% ownership interest. We discuss SONGS further in Note 15 of the Notes to Consolidated Financial Statements in the Annual Report.
NUCLEAR DECOMMISSIONING AND FUNDING
As a result of Edison’s decision to permanently retire SONGS Units 2 and 3, Edison began the decommissioning phase of the plant. Major decommissioning work began in 2020. We expect the majority of the decommissioning work to be completed around 2030. Decommissioning of Unit 1, removed from service in 1992, is largely complete. The remaining work for Unit 1 will be completed once Units 2 and 3 are dismantled and the spent fuel is removed from the site. The spent fuel is currently being stored on-site, until the DOE identifies an independent spent fuel storage installation and puts in place a program for the fuel’s disposal. SDG&E is responsible for approximately 20% of the total decommissioning cost.
In accordance with state and federal requirements and regulations, SDG&E has assets held in the NDT to fund its share of decommissioning costs for SONGS Units 1, 2 and 3. Amounts that were collected in rates for SONGS’ decommissioning are invested in the NDT, which is comprised of externally managed trust funds. Amounts held by the NDT are invested in accordance with CPUC regulations. SDG&E classifies debt and equity securities held in the NDT as available-for-sale. The NDT assets are presented on the Sempra and SDG&E Condensed Consolidated Balance Sheets at fair value with the offsetting credits recorded in noncurrent Regulatory Liabilities.
Except for the use of funds for the planning of decommissioning activities or NDT administrative costs, CPUC approval is required for SDG&E to access the NDT assets to fund SONGS decommissioning costs for Units 2 and 3. In January 2026, the CPUC granted SDG&E authorization to access NDT funds of up to $45 million for forecasted 2026 costs.
Nuclear Decommissioning Trusts
The following table shows the fair values and gross unrealized gains and losses for the securities held in the NDT on the Sempra and SDG&E Condensed Consolidated Balance Sheets. We provide additional fair value disclosures for the NDT in Note 9.
NUCLEAR DECOMMISSIONING TRUSTS
(Dollars in millions)
CostGross
unrealized
gains		Gross
unrealized
losses		Estimated
fair
value
September 30, 2026
Short-term investments, primarily cash equivalents$19 $— $— $19 
Equity securities66 230 (2)294 
Debt securities:
Debt securities issued by the U.S. Treasury and other U.S. government corporations and agencies(1)
43 2 (2)43 
Municipal bonds(2)
304 — (17)287 
Other securities(3)
266 1 (11)256 
Total debt securities613 3 (30)586 
Receivables (payables), net(8)— — (8)
Total$690 $233 $(32)$891 
December 31, 2025
Short-term investments, primarily cash equivalents$12 $— $— $12 
Equity securities69 221 (2)288 
Debt securities:
Debt securities issued by the U.S. Treasury and other U.S. government corporations and agencies46 1 — 47 
Municipal bonds301 4 (5)300 
Other securities253 5 (3)255 
Total debt securities600 10 (8)602 
Receivables (payables), net(3)— — (3)
Total$678 $231 $(10)$899 
(1)    Maturity dates are 2027-2057.
(2)    Maturity dates are 2027-2065.
(3)    Maturity dates are 2026-2071.
The following table shows the proceeds from sales of securities in the NDT and gross realized gains and losses on those sales.
SALES OF SECURITIES IN THE NUCLEAR DECOMMISSIONING TRUSTS
(Dollars in millions)
Three months ended September 30,Nine months ended September 30,
2026202520262025
Proceeds from sales$256 $210 $772 $709 
Gross realized gains12 12 32 43 
Gross realized losses3 1 7 6 
Net unrealized gains and losses, as well as realized gains and losses that are reinvested in the NDT, are included in noncurrent Regulatory Liabilities on Sempra’s and SDG&E’s Condensed Consolidated Balance Sheets. We determine the cost of securities in the trusts on the basis of specific identification.
ASSET RETIREMENT OBLIGATION
The present value of SDG&E’s ARO related to decommissioning costs for all three SONGS units was $440 million at September 30, 2026 and is based on a cost study prepared in 2024, which is pending CPUC approval. SDG&E expects to receive an FD in the fourth quarter of 2026.